[Federal Register Volume 74, Number 109 (Tuesday, June 9, 2009)]
[Notices]
[Pages 27374-27375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13396]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60026; File No. SR-BX-2009-020]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Order 
Approving Proposed Rule Change Regarding Market Maker Obligations

June 2, 2009.
    On April 8, 2009, NASDAQ OMX BX, Inc. (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change regarding market 
maker obligations. The proposal was published in the Federal Register 
on April 28, 2009.\3\ The Commission received no comments on the 
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59804 (April 21, 
2009), 74 FR 19256 (April 28, 2009).
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    The Exchange proposes to amend Chapter VI, Section 6 (Market Maker 
Quotations) of the BOX Rules to change certain obligations of a Market 
Maker regarding the Request for Quote (``RFQ'') process. The proposed 
rule change in Section 6(b)(ii) clarifies that within three seconds of 
receiving an RFQ, a Market Maker must continuously maintain, without 
interruption, a valid two-sided quotation for at least thirty seconds. 
If however, during that thirty second time span, the quotation becomes 
invalid, the Market Maker must post a valid two sided quotation as soon 
as practicable, but within five seconds. The Exchange also proposes to 
remove Section 6(d)(ii), which provided that a Market Maker may be 
required to submit a single quotation or maintain continuous quotations 
in one or more series when called upon by an Options Official, if the 
official believes it is necessary to do so in the interest of a fair 
and orderly market, and replace it with Section 6(b)(iv). As proposed, 
Section 6(b)(iv) will provide that an Options Official may, in the 
interest of a fair and orderly market, call upon Market Makers to post 
a quotation in the same manner as if an RFQ was issued by an Options 
Participant.
    Finally, the Exchange proposes to amend Section 6(d) to establish 
market maker quoting standards based upon a percentage of time 
measurement. As proposed, the section will clarify that ``continuous 
quoting'' reflects quoting parameters based on a daily time measurement 
and will remove

[[Page 27375]]

references to series and replace them with class. Specifically, a 
Market Maker will be required to submit valid quotations on a daily 
basis for at least eighty percent (80%) of the time that a class is 
open for trading in at least ninety percent (90%) of its appointed 
classes. Further, on a daily basis, a Market Maker will be required to 
post valid quotations at least sixty percent (60%) of the time in each 
of its appointed classes during the time that the class is open for 
trading. The Exchange states that this proposed change should allow 
Market Makers to focus their strategy on the entire class to which it 
is appointed, rather than implementing a strategy utilizing each series 
within a class. At the same time, the proposal allows a Market Maker, 
if it chooses, to bring more liquidity to the more actively traded 
series, rather than focusing on series with less activity.
    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\4\ 
In particular, the Commission finds that the proposal is consistent 
with Section 6(b)(5) of the Act,\5\ which requires that an exchange 
have rules designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The 
Commission notes that under the proposal, Market Maker quoting 
obligations will be based on a daily time measurement, as opposed to a 
requirement to continuously provide quotations in a specified 
percentage of appointed options. Market Makers will, however, still be 
subject to requirements on how often they must quote. Specifically, 
Market Makers will be required to submit valid quotations on a daily 
basis for at least 80% of the time that a class is open in 90% of their 
appointed classes and be required to post valid quotations at least 60% 
of the time in each of its appointed classes during the time that the 
class is open for trading. The Commission also notes that the proposal 
helps to clarify Market Maker quoting obligations in response to an RFQ 
or a request by an Options Official to quote in the interest of a fair 
and orderly market. The Commission believes these changes are 
consistent with the Act.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-BX-2009-020) be, and it 
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13396 Filed 6-8-09; 8:45 am]
BILLING CODE 8010-01-P